EU plans new labels to track datacentres' energy and water efficiency

Labels expected to become available for individual datacentres from 2027

The European Commission has proposed new rules requiring large datacentres across the EU to disclose how efficiently they use energy and water.

The proposed EU-wide rating scheme would apply to datacentres with installed capacity of more than 500 kilowatts. Operators would receive a sustainability label based on reported performance indicators, making it easier to compare facilities and encourage more efficient designs.

The Commission adopted the datacentre energy-efficiency package on 21 September, alongside a new consultation on possible mandatory minimum performance standards.

The EU wants to triple its datacentre capacity by 2035 as it expands AI and other digital infrastructure. But the growth is expected to put additional pressure on electricity networks, water supplies and emissions.

EU data shows that datacentres consumed about 68 terawatt-hours (TWh) of electricity in 2024. Consumption is expected to reach 114 TWh by 2030, equivalent to about 3.2% of electricity demand in the bloc, compared with 2.5% currently.

Under the proposed system, operators would disclose information on energy and water efficiency, as well as the relationship between water consumption and local water stress. The labels would also indicate whether a facility can provide services to the electricity system, including adjusting its power consumption to grid conditions or recovering waste heat for use elsewhere.

The Commission says flexible datacentres could help improve grid stability, integrate more renewable electricity and reduce the overall cost of the energy system.

Labels could lead to tougher standards

The proposed rating system would not, by itself, impose limits on how much energy or water an individual datacentre could consume. Nor would operators be required to disclose their total electricity consumption through the label.

Instead, the system is intended to make efficiency information more transparent and provide data that governments and businesses can use when making procurement and policy decisions. The Commission said the rating scheme would also encourage the use of renewable energy, greater grid flexibility and the reuse of waste heat.

The labels are expected to become available for individual datacentres from 2027.

Teresa Ribera, the Commission's executive vice-president for clean, just and competitive transition, said expanding datacentre capacity should not result in a similar increase in pressure on electricity grids, water resources and energy bills.

"That starts with transparency, rating large data centres depending on their impact on our energy system," she stated.

Energy Commissioner Dan Jørgensen said understanding the sector's energy and resource consumption was an essential first step towards integrating datacentres into the European energy system.

Brussels is also examining ways for datacentres to become more active participants in the energy system, including through demand flexibility and the reuse of waste heat. The Commission says recovered heat could potentially supply as many as four million European homes.

Transparency concerns remain

The proposal comes amid criticism from environmental campaigners over the confidentiality of information about individual datacentres.

Investigate Europe reported in April that technology companies, including Microsoft, had lobbied the EU over rules governing the disclosure of environmental information about individual facilities.

Bram Vranken of Corporate Europe Observatory told Euronews that a confidentiality provision remained in the new approach, arguing that it could make some information difficult to independently verify. He added that under the current rules, a datacentre could receive a high energy-efficiency rating while consuming an undisclosed amount of power, potentially running into the gigawatt range.

Efficiency measurements and absolute consumption therefore provide different information about a datacentre's impact, Vranken added.